Nash Company manufactures equipment. Nash’s products range fromsimple automated machinery to complex systems containing numerouscomponents. Unit selling prices range from $200,000 to $1,500,000and are quoted inclusive of installation. The installation processdoes not involve changes to the features of the equipment and doesnot require proprietary information about the equipment in orderfor the installed equipment to perform to specifications. Nash hasthe following arrangement with Winkerbean Inc.

?		Winkerbean purchases equipment from Nash for a price of$1,040,000 and contracts with Nash to install the equipment. Nashcharges the same price for the equipment irrespective of whether itdoes the installation or not. Using market data, Nash determinesinstallation service is estimated to have a standalone sellingprice of $45,400. The cost of the equipment is $581,000.
?		Winkerbean is obligated to pay Nash the $1,040,000 upon thedelivery and installation of the equipment.

Nash delivers the equipment on June 1, 2020, and completes theinstallation of the equipment on September 30, 2020. The equipmenthas a useful life of 10 years. Assume that the equipment and theinstallation are two distinct performance obligations which shouldbe accounted for separately.

Assuming Nash does not have market data with which todetermine the standalone selling price of the installationservices. As a result, an expected cost plus margin approach isused. The cost of installation is $39,200; Nash prices theseservices with a 25% margin relative to cost.

(a)

How should the transaction price of $1,040,000 beallocated among the service obligations? (Do not roundintermediate calculations. Round final answers to 0 decimalplaces.)

Equipment		$
Installation		$

(b)

Prepare the journal entries for Nash for this revenuearrangement on June 1, 2020, assuming Nash receives payment wheninstallation is completed. (Credit account titles areautomatically indented when the amount is entered. Do not indentmanually. If no entry is required, select "No entry" for theaccount titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
(To record sales)
(To record cost of goods sold)
(To record service revenue)
(To record payment received)